South Korean shares closed slightly higher Tuesday ahead of the Federal Reserve's rate-setting meeting this week. The local currency fell slightly against the US dollar.

The benchmark Korea Composite Stock Price Index added 4.15 points, or 0.15 percent, to close at 2,705.32.

Trade volume was moderate at 550 million shares worth 11.6 trillion won ($8.4 billion), with losers outnumbering gainers 510 to 349.

The index had opened higher, tracking overnight gains on Wall Street.

After choppy trading, the KOSPI finished in positive territory, with investors taking to the sidelines before the start of the two-day US Federal Open MarketCommittee meeting Tuesday, where the Federal Reserve is widely expected to keep its key rate frozen.

"The US stock market closed higher despite investor caution ahead of the FOMC meeting," Hana Securities researcher Kim Dae-wook said. "However, local shares are expected to move in a tight range amid an advance by the US dollar and a rise in the rates of long-term US bonds."

Retail investors remained net buyers of local shares for a second consecutive session, scooping up a net 346.5 billion won worth of shares, while institutions net sold 119.8 billion won. Foreigners offloaded 224 billion won worth of shares, snapping a three-day buying streak.

Large caps closed mixed.

Market bellwether Samsung Electronics slipped 0.66 percent to 75,200 won, while leading pharmaceutical company Celltrion gained 1.64 percent to 192,600 won.

Top battery maker LG Energy Solution added 0.9 percent to 356,500 won, with its smaller local rival Samsung SDS advancing 0.65 percent to 155,600 won.

Top portal operator Naver lost 0.29 percent to 170,200 won, while top mobile service provider SK Telecom retreated 0.45 percent to 51,100 won.

Leading carmaker Hyundai Motor surged 1.31 percent to 271,000 won, while its smaller affiliate Kia Motors gained 0.49 percent to 122,000 won.

The local currency closed at 1,378.40 won against the US greenback, down 2.40 won from the previous session's close. (Yonhap)